þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 76-0207995 |
(State or other jurisdiction | (I.R.S. Employer Identification No.) |
of incorporation or organization) | |
17021 Aldine Westfield, Houston, Texas | 77073-5101 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o |
(Do not check if a smaller reporting company) |
Page No. | ||
Three Months Ended March 31, | |||||||
(In millions, except per share amounts) | 2017 | 2016 | |||||
Revenue: | |||||||
Sales | $ | 955 | $ | 1,013 | |||
Services | 1,307 | 1,657 | |||||
Total revenue | 2,262 | 2,670 | |||||
Costs and expenses: | |||||||
Cost of sales | 775 | 944 | |||||
Cost of services | 1,113 | 1,714 | |||||
Research and engineering | 99 | 102 | |||||
Marketing, general and administrative | 184 | 207 | |||||
Impairment and restructuring charges | 90 | 160 | |||||
Merger and related costs | 31 | 102 | |||||
Total costs and expenses | 2,292 | 3,229 | |||||
Operating loss | (30 | ) | (559 | ) | |||
Interest expense, net | (35 | ) | (55 | ) | |||
Loss before income tax and equity in loss of affiliate | (65 | ) | (614 | ) | |||
Equity in loss of affiliate | (18 | ) | — | ||||
Income tax provision | (47 | ) | (367 | ) | |||
Net loss | (130 | ) | (981 | ) | |||
Net loss attributable to noncontrolling interests | 1 | — | |||||
Net loss attributable to Baker Hughes | $ | (129 | ) | $ | (981 | ) | |
Basic and diluted loss per share attributable to Baker Hughes | $ | (0.30 | ) | $ | (2.22 | ) | |
Cash dividends per share | $ | 0.17 | $ | 0.17 |
Three Months Ended March 31, | |||||||
(In millions) | 2017 | 2016 | |||||
Net loss | $ | (130 | ) | $ | (981 | ) | |
Other comprehensive income (loss): | |||||||
Foreign currency translation adjustments | 23 | 65 | |||||
Pension and other postretirement benefits, net of tax | (1 | ) | 2 | ||||
Other comprehensive income (loss) | 22 | 67 | |||||
Comprehensive loss | (108 | ) | (914 | ) | |||
Comprehensive loss attributable to noncontrolling interests | 1 | — | |||||
Comprehensive loss attributable to Baker Hughes | $ | (107 | ) | $ | (914 | ) |
(In millions) | March 31, 2017 | December 31, 2016 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 4,222 | $ | 4,572 | |||
Accounts receivable - less allowance for doubtful accounts (2017 - $396; 2016 - $509) | 2,162 | 2,251 | |||||
Inventories, net | 1,907 | 1,809 | |||||
Other current assets | 673 | 535 | |||||
Total current assets | 8,964 | 9,167 | |||||
Property, plant and equipment - less accumulated depreciation (2017 - $6,574; 2016 - $6,567) | 4,128 | 4,271 | |||||
Goodwill | 4,090 | 4,084 | |||||
Intangible assets, net | 294 | 318 | |||||
Other assets | 1,200 | 1,194 | |||||
Total assets | $ | 18,676 | $ | 19,034 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,088 | $ | 1,027 | |||
Short-term debt and current portion of long-term debt | 134 | 132 | |||||
Accrued employee compensation | 420 | 566 | |||||
Income taxes payable | 75 | 78 | |||||
Other accrued liabilities | 413 | 501 | |||||
Total current liabilities | 2,130 | 2,304 | |||||
Long-term debt | 2,884 | 2,886 | |||||
Deferred income taxes and other tax liabilities | 334 | 328 | |||||
Liabilities for pensions and other postretirement benefits | 626 | 626 | |||||
Other liabilities | 151 | 153 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Common stock, one dollar par value (shares authorized - 750; issued and outstanding: 2017 - 426; 2016 - 424) | 427 | 425 | |||||
Capital in excess of par value | 6,735 | 6,708 | |||||
Retained earnings | 6,380 | 6,583 | |||||
Accumulated other comprehensive loss | (1,011 | ) | (1,033 | ) | |||
Treasury stock | (60 | ) | (27 | ) | |||
Baker Hughes stockholders' equity | 12,471 | 12,656 | |||||
Noncontrolling interests | 80 | 81 | |||||
Total equity | 12,551 | 12,737 | |||||
Total liabilities and equity | $ | 18,676 | $ | 19,034 |
Baker Hughes Stockholders' Equity | |||||||||||||||||||||||||||
(In millions, except per share amounts) | Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Non-controlling Interests | Total Equity | ||||||||||||||||||||
Balance at December 31, 2016 | $ | 425 | $ | 6,708 | $ | 6,583 | $ | (1,033 | ) | $ | (27 | ) | $ | 81 | $ | 12,737 | |||||||||||
Comprehensive loss: | |||||||||||||||||||||||||||
Net loss | (129 | ) | (1 | ) | (130 | ) | |||||||||||||||||||||
Other comprehensive income | 22 | 22 | |||||||||||||||||||||||||
Activity related to stock plans | 2 | 2 | (33 | ) | (29 | ) | |||||||||||||||||||||
Stock-based compensation | 29 | 29 | |||||||||||||||||||||||||
Cash dividends ($0.17 per share) | (74 | ) | (74 | ) | |||||||||||||||||||||||
Net activity related to noncontrolling interests | (4 | ) | (4 | ) | |||||||||||||||||||||||
Balance at March 31, 2017 | $ | 427 | $ | 6,735 | $ | 6,380 | $ | (1,011 | ) | $ | (60 | ) | $ | 80 | $ | 12,551 |
Baker Hughes Stockholders' Equity | |||||||||||||||||||||||||||
(In millions, except per share amounts) | Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Non-controlling Interests | Total Equity | ||||||||||||||||||||
Balance at December 31, 2015 | $ | 437 | $ | 7,261 | $ | 9,614 | $ | (1,005 | ) | $ | (9 | ) | $ | 84 | $ | 16,382 | |||||||||||
Comprehensive loss: | |||||||||||||||||||||||||||
Net loss | (981 | ) | (981 | ) | |||||||||||||||||||||||
Other comprehensive income | 67 | 67 | |||||||||||||||||||||||||
Activity related to stock plans | 1 | (14 | ) | (12 | ) | (25 | ) | ||||||||||||||||||||
Stock-based compensation | 34 | 34 | |||||||||||||||||||||||||
Cash dividends ($0.17 per share) | (74 | ) | (74 | ) | |||||||||||||||||||||||
Net activity related to noncontrolling interests | (1 | ) | (1 | ) | |||||||||||||||||||||||
Balance at March 31, 2016 | $ | 438 | $ | 7,281 | $ | 8,559 | $ | (938 | ) | $ | (21 | ) | $ | 83 | $ | 15,402 |
Three Months Ended March 31, | |||||||
(In millions) | 2017 | 2016 | |||||
Cash flows from operating activities: | |||||||
Net loss | $ | (130 | ) | $ | (981 | ) | |
Adjustments to reconcile net loss to net cash flows from operating activities: | |||||||
Depreciation and amortization | 218 | 354 | |||||
Impairment of assets | 19 | 118 | |||||
Provision for deferred income taxes | 12 | 359 | |||||
Provision for doubtful accounts | (94 | ) | 48 | ||||
Other noncash items | (5 | ) | (3 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 107 | 386 | |||||
Inventories | (92 | ) | 149 | ||||
Accounts payable | 59 | (263 | ) | ||||
Other operating items, net | (257 | ) | (266 | ) | |||
Net cash flows used in operating activities | (163 | ) | (99 | ) | |||
Cash flows from investing activities: | |||||||
Expenditures for capital assets | (87 | ) | (86 | ) | |||
Proceeds from disposal of assets | 76 | 82 | |||||
Proceeds from maturities of investment securities | 3 | 202 | |||||
Purchases of investment securities | (68 | ) | (137 | ) | |||
Net cash flows provided by (used in) investing activities | (76 | ) | 61 | ||||
Cash flows from financing activities: | |||||||
Net repayments of short-term debt and other borrowings | (6 | ) | (5 | ) | |||
Dividends paid | (74 | ) | (74 | ) | |||
Other financing items, net | (32 | ) | (16 | ) | |||
Net cash flows used in financing activities | (112 | ) | (95 | ) | |||
Effect of foreign exchange rate changes on cash and cash equivalents | 1 | 1 | |||||
Decrease in cash and cash equivalents | (350 | ) | (132 | ) | |||
Cash and cash equivalents, beginning of period | 4,572 | 2,324 | |||||
Cash and cash equivalents, end of period | $ | 4,222 | $ | 2,192 | |||
Supplemental cash flows disclosures: | |||||||
Income taxes paid, net of refunds | $ | 67 | $ | 85 | |||
Interest paid | $ | 56 | $ | 70 | |||
Supplemental disclosure of noncash investing activities: | |||||||
Capital expenditures included in accounts payable | $ | 29 | $ | 32 | |||
Receipt of bonds for outstanding accounts receivable | $ | 84 | $ | — |
Three Months Ended | Three Months Ended | ||||||
Restructuring charges | March 31, 2017 | March 31, 2016 | |||||
Global Cost Reduction and Restructuring | $ | 21 | $ | 42 | |||
2017 Oilfield Restructuring | 69 | — | |||||
Total restructuring charges | $ | 90 | $ | 42 |
Three Months Ended | Three Months Ended | ||||||
March 31, 2017 | March 31, 2016 | ||||||
Workforce reductions | $ | 3 | $ | 47 | |||
Other | 18 | (5 | ) | ||||
Total restructuring charges | $ | 21 | $ | 42 |
Three Months Ended | |||
March 31, 2017 | |||
Workforce reductions | $ | 58 | |
Other | 11 | ||
Total restructuring charges | $ | 69 |
Revenue | $ | 100 | |
Gross profit (loss) | (28 | ) | |
Net loss | (39 | ) | |
Net loss attributable to Baker Hughes | (18 | ) |
Three Months Ended | Three Months Ended | ||||||||||||||
March 31, 2017 | March 31, 2016 | ||||||||||||||
Segments | Revenue | Operating Profit (Loss) Before Tax | Revenue | Operating Profit (Loss) Before Tax | |||||||||||
North America | $ | 712 | $ | (23 | ) | $ | 819 | $ | (225 | ) | |||||
Latin America | 201 | 84 | 277 | (66 | ) | ||||||||||
Europe/Africa/Russia Caspian | 461 | 1 | 611 | (19 | ) | ||||||||||
Middle East/Asia Pacific | 661 | 72 | 718 | 49 | |||||||||||
Industrial Services | 227 | (6 | ) | 245 | (4 | ) | |||||||||
Total Operations | 2,262 | 128 | 2,670 | (265 | ) | ||||||||||
Corporate | — | (37 | ) | — | (32 | ) | |||||||||
Interest expense, net | — | (35 | ) | — | (55 | ) | |||||||||
Impairment and restructuring charges | — | (90 | ) | — | (160 | ) | |||||||||
Merger and related costs | — | (31 | ) | — | (102 | ) | |||||||||
Total | $ | 2,262 | $ | (65 | ) | $ | 2,670 | $ | (614 | ) |
Three Months Ended March 31, | |||||
2017 | 2016 | ||||
Weighted average common shares outstanding for basic and diluted loss per share | 429 | 442 | |||
Anti-dilutive shares excluded from diluted loss per share (1) | 1 | — | |||
Future potentially dilutive shares excluded from diluted loss per share (2) | 2 | 7 |
(1) | The calculation of diluted loss per share for the three months ended March 31, 2017 excludes shares potentially issuable under stock-based incentive compensation plans and the employee stock purchase plan, as their effect, if included, would have been anti-dilutive. |
(2) | Options where the exercise price exceeds the average market price are excluded from the calculation of diluted net loss or earnings per share because their effect would be anti-dilutive. |
March 31, 2017 | December 31, 2016 | ||||||
Finished goods | $ | 1,679 | $ | 1,607 | |||
Work in process | 123 | 105 | |||||
Raw materials | 105 | 97 | |||||
Total inventories | $ | 1,907 | $ | 1,809 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross Carrying Amount | Less: Accumulated Amortization | Net | Gross Carrying Amount | Less: Accumulated Amortization | Net | ||||||||||||||||||
Technology | $ | 523 | $ | 275 | $ | 248 | $ | 527 | $ | 267 | $ | 260 | |||||||||||
Customer relationships | 68 | 33 | 35 | 74 | 31 | 43 | |||||||||||||||||
Trade names | 19 | 12 | 7 | 90 | 79 | 11 | |||||||||||||||||
Other | 18 | 14 | 4 | 17 | 13 | 4 | |||||||||||||||||
Total intangible assets | $ | 628 | $ | 334 | $ | 294 | $ | 708 | $ | 390 | $ | 318 |
Year | Estimated Amortization Expense | ||
Remainder of 2017 | $ | 39 | |
2018 | 48 | ||
2019 | 45 | ||
2020 | 38 | ||
2021 | 32 | ||
2022 | 29 |
U.S. Pension Benefits | Non-U.S. Pension Benefits | Other Postretirement Benefits | |||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Service cost | $ | 10 | $ | 13 | $ | 3 | $ | 4 | $ | 1 | $ | 1 | |||||||||||
Interest cost | 7 | 7 | 6 | 7 | 1 | 1 | |||||||||||||||||
Expected return on plan assets | (10 | ) | (10 | ) | (9 | ) | (9 | ) | — | — | |||||||||||||
Amortization of prior service credit | — | — | — | — | (2 | ) | (2 | ) | |||||||||||||||
Amortization of net actuarial loss | 2 | 3 | 2 | 1 | — | — | |||||||||||||||||
Net periodic cost | $ | 9 | $ | 13 | $ | 2 | $ | 3 | $ | — | $ | — |
Pensions and Other Postretirement Benefits | Foreign Currency Translation Adjustments | Accumulated Other Comprehensive Loss | |||||||||||||
Balance at December 31, 2016 | $ | (284 | ) | $ | (749 | ) | $ | (1,033 | ) | ||||||
Other comprehensive income (loss) before reclassifications | (3 | ) | 23 | 20 | |||||||||||
Amounts reclassified from accumulated other comprehensive loss | 2 | — | 2 | ||||||||||||
Balance at March 31, 2017 | $ | (285 | ) | $ | (726 | ) | $ | (1,011 | ) |
Pensions and Other Postretirement Benefits | Foreign Currency Translation Adjustments | Accumulated Other Comprehensive Loss | |||||||||||||
Balance at December 31, 2015 | $ | (261 | ) | $ | (744 | ) | $ | (1,005 | ) | ||||||
Other comprehensive income before reclassifications | 1 | 65 | 66 | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss | 2 | — | 2 | ||||||||||||
Deferred taxes | (1 | ) | — | (1 | ) | ||||||||||
Balance at March 31, 2016 | $ | (259 | ) | $ | (679 | ) | $ | (938 | ) |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Brent oil price ($/Bbl) (1) | $ | 54.04 | $ | 34.53 | |||
WTI oil price ($/Bbl) (2) | 51.70 | 33.41 | |||||
Natural gas price ($/mmBtu) (3) | 2.98 | 1.96 |
(1) | Bloomberg Dated Brent ("Brent") Oil Spot Price per Barrel |
(2) | Bloomberg West Texas Intermediate ("WTI") Cushing Crude Oil Spot Price per Barrel |
(3) | Bloomberg Henry Hub Natural Gas Spot Price per million British Thermal Unit |
Three Months Ended March 31, | ||||||
2017 | 2016 | % Change | ||||
U.S. - land and inland waters | 722 | 535 | 35 | % | ||
U.S. - offshore | 21 | 26 | (19 | %) | ||
Canada | 295 | 165 | 79 | % | ||
North America | 1,038 | 726 | 43 | % | ||
Latin America | 180 | 233 | (23 | %) | ||
North Sea | 26 | 30 | (13 | %) | ||
Continental Europe | 74 | 74 | — | % | ||
Africa | 79 | 91 | (13 | %) | ||
Middle East | 383 | 403 | (5 | %) | ||
Asia Pacific | 197 | 186 | 6 | % | ||
Outside North America | 939 | 1,017 | (8 | %) | ||
Worldwide | 1,977 | 1,743 | 13 | % |
Three Months Ended March 31, | $ Change | % Change | ||||||||||||
2017 | 2016 | |||||||||||||
Revenue: | ||||||||||||||
North America | $ | 712 | $ | 819 | $ | (107 | ) | (13 | %) | |||||
Latin America | 201 | 277 | (76 | ) | (27 | %) | ||||||||
Europe/Africa/Russia Caspian | 461 | 611 | (150 | ) | (25 | %) | ||||||||
Middle East/Asia Pacific | 661 | 718 | (57 | ) | (8 | %) | ||||||||
Industrial Services | 227 | 245 | (18 | ) | (7 | %) | ||||||||
Total | $ | 2,262 | $ | 2,670 | $ | (408 | ) | (15 | %) |
Three Months Ended March 31, | $ Change | % Change | ||||||||||||
2017 | 2016 | |||||||||||||
Operating Profit (Loss) Before Tax: | ||||||||||||||
North America | $ | (23 | ) | $ | (225 | ) | $ | 202 | 90 | % | ||||
Latin America | 84 | (66 | ) | 150 | 227 | % | ||||||||
Europe/Africa/Russia Caspian | 1 | (19 | ) | 20 | 105 | % | ||||||||
Middle East/Asia Pacific | 72 | 49 | 23 | 47 | % | |||||||||
Industrial Services | (6 | ) | (4 | ) | (2 | ) | (50 | %) | ||||||
Total Operations | 128 | (265 | ) | 393 | 148 | % | ||||||||
Corporate | (37 | ) | (32 | ) | (5 | ) | 16 | % | ||||||
Interest expense, net | (35 | ) | (55 | ) | 20 | (36 | %) | |||||||
Impairment and restructuring charges | (90 | ) | (160 | ) | 70 | (44 | %) | |||||||
Merger and related costs | (31 | ) | (102 | ) | 71 | (70 | %) | |||||||
Loss Before Income Taxes and Equity in Loss of Affiliate | $ | (65 | ) | $ | (614 | ) | $ | 549 | 89 | % |
Three Months Ended March 31, | |||||||||||||
2017 | 2016 | ||||||||||||
$ | % | $ | % | ||||||||||
Revenue | $ | 2,262 | 100 | % | $ | 2,670 | 100 | % | |||||
Cost of revenue | 1,888 | 83.5 | % | 2,658 | 99.6 | % | |||||||
Research and engineering | 99 | 4.4 | % | 102 | 3.8 | % | |||||||
Marketing, general and administrative | 184 | 8.1 | % | 207 | 7.8 | % | |||||||
Impairment and restructuring charges | 90 | 4.0 | % | 160 | 6.0 | % | |||||||
Merger and related costs | 31 | 1.4 | % | 102 | 3.8 | % |
(In millions) | 2017 | 2016 | |||||
Operating activities | $ | (163 | ) | $ | (99 | ) | |
Investing activities | (76 | ) | 61 | ||||
Financing activities | (112 | ) | (95 | ) |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share(1) | Total Number of Shares Purchased as Part of a Publicly Announced Program (2) | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program(3) | ||||||||
January 1-31, 2017 | 487,595 | $ | 62.54 | — | $ | 1,237,161,230 | ||||||
February 1-28, 2017 | 845 | $ | 59.96 | — | $ | 1,237,161,230 | ||||||
March 1-31, 2017 | — | $ | — | — | $ | 1,237,161,230 | ||||||
Total | 488,440 | $ | 62.54 | — |
(1) | Represents shares purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock awards and restricted stock units. |
(2) | There were no repurchases during the first quarter of 2017 under our previously announced purchase program. |
(3) | Under the transaction agreement with General Electric, as described in Note 2. "General Electric Transaction Agreement" of the Notes to the Consolidated Condensed Financial Statements, we have agreed to not repurchase any shares of our common stock other than in connection with shares repurchased from employees to satisfy the tax withholding obligations in connection with the vesting of equity awards. |
2.1 | Amendment dated as of March 27, 2017, to the Transaction Agreement and Plan of Merger, dated as of October 30, 2016, entered into among General Electric Company, Baker Hughes Incorporated, Bear Newco, Inc., Bear MergerSub, Inc., BHI Newco, Inc. and Bear MergerSub 2, Inc. (filed as Exhibit 2.1 to the Current Report of Baker Hughes Incorporated on Form 8-K filed on March 31, 2017). | |
3.1 | Certificate of Amendment dated April 22, 2010 and the Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Quarterly Report of Baker Hughes Incorporated on Form 10-Q for the quarter ended March 31, 2010). | |
3.2 | Restated Bylaws of Baker Hughes Incorporated effective as of January 26, 2017 (filed as Exhibit 3.1 to the Current Report of Baker Hughes Incorporated on Form 8-K filed on January 31, 2017). | |
4.1 | Certificate of Amendment dated April 22, 2010 and the Restated Certificate of Incorporate (filed as Exhibit 3.1 to the Quarterly Report of Baker Hughes Incorporated on Form 10-Q for the quarter ended March 31, 2010). | |
4.2 | Restated Bylaws of Baker Hughes Incorporated effective as of January 26, 2017 (filed as Exhibit 3.1 to the Current Report of Baker Hughes Incorporated on Form 8-K filed on January 31, 2017). | |
10.1 + | Form of Baker Hughes Incorporated Restricted Stock Unit Award Agreement and Terms and Conditions for officers with a three-year cliff vest pursuant to the 2002 Director & Officer Long-Term Incentive Plan (filed as Exhibit 10.1 to the Current Report of Baker Hughes Incorporated on Form 8-K filed on January 31, 2017). | |
10.2 + | Form of Baker Hughes Incorporated Restricted Stock Unit Award Agreement and Terms and Conditions for officers with a three-year graded vest pursuant to the 2002 Director & Officer Long-Term Incentive Plan (filed as Exhibit 10.2 to the Current Report of Baker Hughes Incorporated on Form 8-K filed on January 31, 2017). | |
10.3 + | Form of Baker Hughes Incorporated Restricted Stock Unit Award Agreement and Terms and Conditions for officers with a three-year performance-based vest pursuant to the 2002 Director & Officer Long-Term Incentive Plan (filed as Exhibit 10.3 to the Current Report of Baker Hughes Incorporated on Form 8-K filed on January 31, 2017). | |
10.4 + | Performance Goals for Performance-Based Restricted Stock Unit Awards pursuant to the 2002 Director & Officer Long-Term Incentive Plan (filed as Exhibit 10.4 to the Current Report of Baker Hughes Incorporated on Form 8-K filed on January 31, 2017). | |
31.1** | Certification of Martin S. Craighead, Chairman and Chief Executive Officer, furnished pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. | |
31.2** | Certification of Kimberly A. Ross, Chief Financial Officer, furnished pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. | |
32** | Statement of Martin S. Craighead, Chairman and Chief Executive Officer, and Kimberly A. Ross, Chief Financial Officer, furnished pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. | |
95* | Mine Safety Disclosure. | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Schema Document | |
101.CAL* | XBRL Calculation Linkbase Document | |
101.LAB* | XBRL Label Linkbase Document | |
101.PRE* | XBRL Presentation Linkbase Document | |
101.DEF* | XBRL Definition Linkbase Document |
BAKER HUGHES INCORPORATED (Registrant) | |||
Date: | April 28, 2017 | By: | /s/ KIMBERLY A. ROSS |
Kimberly A. Ross | |||
Senior Vice President and Chief Financial Officer | |||
Date: | April 28, 2017 | By: | /s/ KELLY C. JANZEN |
Kelly C. Janzen | |||
Vice President, Controller and Chief Accounting Officer |
Date: | April 28, 2017 | By: | /s/ Martin S. Craighead | |
Martin S. Craighead | ||||
Chairman and Chief Executive Officer | ||||
Date: | April 28, 2017 | By: | /s/ Kimberly A. Ross | |
Kimberly A. Ross | ||||
Senior Vice President and Chief Financial Officer | ||||
(i) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(ii) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
/s/ Martin S. Craighead | ||||
Name: | Martin S. Craighead | |||
Title: | Chairman and Chief Executive Officer | |||
Date: | April 28, 2017 | |||
/s/ Kimberly A. Ross | ||||
Name: | Kimberly A. Ross | |||
Title: | Senior Vice President and Chief Financial Officer | |||
Date: | April 28, 2017 |
Mine or Operating Name/MSHA Identification Number | Section 104 S&S Citations | Section 104(b) Orders | Section 104(d) Citations and Orders | Section 110(b)(2) Violations | Section 107(a) Orders | Proposed MSHA Assessments (1) | Mining Related Fatalities | Received Notice of Pattern of Violations Under Section 104(e) (yes/no) | Received Notice of Potential to Have Pattern Under Section 104(e) (yes/no) | Legal Actions Pending as of Last Day of Period | Legal Actions Initiated During Period | Legal Actions Resolved During Period | ||
Morgan City Grinding Plant/1601357 | 0 | 0 | 0 | 0 | 0 | $ | — | 0 | N | N | 0 | 0 | 0 | |
Argenta Mine and Mill/2601152 | 0 | 0 | 0 | 0 | 0 | $ | — | 0 | N | N | 0 | 0 | 0 | |
Corpus Christi Grinding Plant/4103112 | 0 | 0 | 0 | 0 | 0 | $ | — | 0 | N | N | 0 | 0 | 0 |
(1) | Amounts included are the total dollar value of proposed assessments received from MSHA during the three months ended March 31, 2017, regardless of whether the assessment has been challenged or appealed. Citations and orders can be contested and appealed, and as part of that process, are sometimes reduced in severity and amount, and sometimes dismissed. The number of citations, orders, and proposed assessments vary by inspector and also vary depending on the size and type of the operation. |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Apr. 18, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | BAKER HUGHES INC | |
Entity Central Index Key | 0000808362 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 425,463,715 |
Consolidated Condensed Statements of Income (Loss) (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Revenue: | ||
Sales | $ 955 | $ 1,013 |
Services | 1,307 | 1,657 |
Total revenue | 2,262 | 2,670 |
Costs and expenses: | ||
Cost of sales | 775 | 944 |
Cost of services | 1,113 | 1,714 |
Research and engineering | 99 | 102 |
Marketing, general and administrative | 184 | 207 |
Impairment and restructuring charges | 90 | 160 |
Merger and related costs | 31 | 102 |
Total costs and expenses | 2,292 | 3,229 |
Operating loss | (30) | (559) |
Interest expense, net | (35) | (55) |
Loss before income tax and equity in loss of affiliate | (65) | (614) |
Equity in loss of affiliate | (18) | 0 |
Income tax provision | (47) | (367) |
Net loss | (130) | (981) |
Net loss attributable to noncontrolling interests | 1 | 0 |
Net loss attributable to Baker Hughes | $ (129) | $ (981) |
Basic and diluted loss per share attributable to Baker Hughes (In dollars per share) | $ (0.30) | $ (2.22) |
Cash dividends per share (in dollars per share) | $ 0.17 | $ 0.17 |
Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2017 |
Mar. 31, 2016 |
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Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (130) | $ (981) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 23 | 65 |
Pension and other postretirement benefits, net of tax | (1) | 2 |
Other comprehensive income (loss) | 22 | 67 |
Comprehensive loss | (108) | (914) |
Comprehensive loss attributable to noncontrolling interests | 1 | 0 |
Comprehensive loss attributable to Baker Hughes | $ (107) | $ (914) |
Consolidated Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 396 | $ 509 |
Accumulated depreciation | $ 6,574 | $ 6,567 |
Common stock par value (in dollars per share) | $ 1 | $ 1 |
Common stock authorized (shares) | 750,000,000 | 750,000,000 |
Common stock issued (shares) | 426,000,000 | 424,000,000 |
Common stock outstanding (shares) | 426,000,000 | 424,000,000 |
Consolidated Condensed Statements of Changes in Equity (Unaudited) - USD ($) $ in Millions |
Total |
Common Stock |
Capital in Excess of Par Value |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Treasury Stock |
Non-controlling Interests |
---|---|---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2015 | $ 16,382 | $ 437 | $ 7,261 | $ 9,614 | $ (1,005) | $ (9) | $ 84 |
Comprehensive loss: | |||||||
Net loss | (981) | (981) | |||||
Other comprehensive income | 67 | 67 | |||||
Activity related to stock plans | (25) | 1 | (14) | (12) | |||
Stock-based compensation | 34 | 34 | |||||
Cash dividends | (74) | (74) | |||||
Net activity related to noncontrolling interests | (1) | (1) | |||||
Ending Balance at Mar. 31, 2016 | 15,402 | 438 | 7,281 | 8,559 | (938) | (21) | 83 |
Beginning Balance at Dec. 31, 2016 | 12,737 | 425 | 6,708 | 6,583 | (1,033) | (27) | 81 |
Comprehensive loss: | |||||||
Net loss | (130) | (129) | (1) | ||||
Other comprehensive income | 22 | 22 | |||||
Activity related to stock plans | (29) | 2 | 2 | (33) | |||
Stock-based compensation | 29 | 29 | |||||
Cash dividends | (74) | (74) | |||||
Net activity related to noncontrolling interests | (4) | (4) | |||||
Ending Balance at Mar. 31, 2017 | $ 12,551 | $ 427 | $ 6,735 | $ 6,380 | $ (1,011) | $ (60) | $ 80 |
Consolidated Condensed Statements of Changes in Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | |
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Mar. 31, 2017 |
Mar. 31, 2016 |
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Statement of Stockholders' Equity [Abstract] | ||
Cash dividends per share (in dollars per share) | $ 0.17 | $ 0.17 |
Summary of Significant Accounting Policies - (Notes) |
3 Months Ended |
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Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Baker Hughes Incorporated ("Baker Hughes," "Company," "we," "our," or "us,") is a leading supplier of oilfield services, products, technology and systems used for drilling, formation evaluation, completion and production, pressure pumping, and reservoir development in the worldwide oil and natural gas industry. We also provide products and services for other businesses including downstream chemicals, and process and pipeline services. Basis of Presentation Our unaudited consolidated condensed financial statements included herein have been prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America ("U.S.") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. These unaudited consolidated condensed financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. We believe the unaudited consolidated condensed financial statements included herein reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the interim periods. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. In the Notes to Unaudited Consolidated Condensed Financial Statements, all dollar and share amounts in tabulations are in millions of dollars and shares, respectively, unless otherwise indicated. New Accounting Standards Adopted In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-17, Balance Sheet Classification of Deferred Taxes. The new standard requires all deferred tax assets and liabilities to be classified as noncurrent in a classified statement of financial position. We adopted this pronouncement prospectively on January 1, 2017, thus prior periods were not adjusted. The impact of adoption was not material to our consolidated condensed balance sheets. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. The simplifications in this standard affect several aspects of the accounting for share-based payment transactions, including the requirement to record all of the tax effects related to share-based payments at settlement (or expiration) through the income statement. We adopted this pronouncement on January 1, 2017. The impact of adoption was not material to our consolidated condensed financial statements and related disclosures. New Accounting Standards To Be Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The new standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity's nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The pronouncement is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The standard permits either a full retrospective method of adoption, in which the standard is applied to all the periods presented, or a modified retrospective method of adoption, in which the standard is applied only to the current period with a cumulative-effect adjustment reflected in retained earnings. We currently intend on adopting the new standard on January 1, 2018, following the modified retrospective method, but will not make a final decision on the adoption method until later in 2017. We are currently evaluating the provisions of ASU 2014-09 and assessing the impact, if any, that it may have on our financial position and results of operations. In the fourth quarter of 2016, we formed an implementation work team, completed training of the new ASU's revenue recognition model and began policy and contract review. Our approach includes performing a detailed review of contracts representative of our different product lines and comparing historical accounting policies and practices to the new requirements that are in the standard. We engaged external resources to help the Company complete the analysis of potential changes to current accounting practices related to material revenue streams and are substantially complete with the initial assessment. During the remainder of 2017, we will quantify the potential impacts as well as design and implement required process, system and control changes to address the impacts identified in the assessment. We are not currently able to reasonably estimate the impact the revenue recognition will have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases, a new standard on accounting for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB's new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, using a modified retrospective approach. Early adoption is permitted. We are currently evaluating the provisions of ASU 2016-02 and assessing the impact it will have on our consolidated financial statements and related disclosures. In the fourth quarter of 2016, we formed an implementation work team and completed training of the new ASU's lease model with the implementation team. We engaged external resources to complete an initial review of lease agreements representative of the different aspects of our business, to assess the potential changes to current accounting practices as a result of the new requirements that are in the standard. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. The new standard amends the impairment model for trade receivables, net investments in leases, debt securities, loans and certain other instruments to utilize an expected loss methodology in place of the currently used incurred loss methodology. This pronouncement is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Early adoption will be permitted for annual periods beginning after December 15, 2018. We are currently evaluating the provisions of the pronouncement and assessing the impact, if any, on our consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The standard addresses the classification and presentation of eight specific cash flow issues that currently result in diverse practices. This pronouncement is effective for annual reporting periods beginning after December 15, 2017. The amendments in this ASU should be applied using a retrospective approach. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures, but the impact is not expected to be material. In October 2016, the FASB issued ASU No. 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The standard removes the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. This pronouncement is effective for annual reporting periods beginning after December 15, 2017. The amendments in this ASU should be applied using a retrospective approach. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures, but the impact is not expected to be material. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of Step two of the goodwill impairment test. As a result, under this ASU, an entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This pronouncement is effective for impairment tests in fiscal years beginning after December 15, 2019, on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes the income statement presentation of net periodic benefit cost by requiring separation between the service cost component and all other components. The service cost component is required to be presented as an operating expense with other similar compensation costs arising for services rendered by the pertinent employees during the period. The non-operating components must be presented outside of income from operations. This pronouncement is effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures, but the impact is not expected to be material. |
General Electric Transaction Agreement - (Notes) |
3 Months Ended |
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Mar. 31, 2017 | |
Business Combinations [Abstract] | |
General Electric Transaction Agreement | NOTE 2. GENERAL ELECTRIC TRANSACTION AGREEMENT On October 30, 2016, Baker Hughes, General Electric Company ("GE"), Bear Newco, Inc. ("Newco"), a Delaware corporation and a direct wholly owned subsidiary of Baker Hughes, and Bear MergerSub, Inc. ("Merger Sub"), a Delaware corporation and a direct wholly owned subsidiary of Newco, entered into a Transaction Agreement and Plan of Merger (the "Transaction Agreement"). The Transaction Agreement was amended on March 27, 2017 pursuant to the Amendment to Transaction Agreement and Plan of Merger (the "Amendment") entered into among Baker Hughes, GE, Newco, Merger Sub, BHI Newco, Inc., a Delaware corporation and wholly owned subsidiary of Baker Hughes ("Newco 2"), and Bear MergerSub 2, Inc., a Delaware corporation and direct wholly owned subsidiary of Newco 2 ("Merger Sub 2"). The Amendment provides that the transactions contemplated by the Transaction Agreement (the "GE Transaction") include (i) the merger of Baker Hughes with Merger Sub 2, with Baker Hughes surviving the merger as a direct wholly owned subsidiary of Newco 2 (the "First Merger"), (ii) the conversion of the surviving corporation of the First Merger into a Delaware limited liability company ("Newco LLC") (the "Conversion"), (iii) the merger of Newco 2 with Newco, with Newco surviving the merger (the "Second Merger" and collectively with the First Merger, the "Mergers") and (iv) the transfer by GE to Newco LLC, following the Mergers and the Conversion, and as originally provided under the Transaction Agreement, of (1) all of the equity interests of the holding companies that will hold directly or indirectly all of the assets and liabilities of GE's oil and gas business ("GE O&G"), including any GE O&G operating subsidiaries, and (2) $7.4 billion in cash in exchange for approximately 62.5% of the membership interests in Newco LLC. Newco will operate as a public company following the closing of the GE Transaction (the "Closing"). Following the Closing, Newco will distribute as a special dividend an amount equal to $17.50 per share to the holders of record of the Newco Class A common stock, which are the former Baker Hughes stockholders. As originally provided under the Transaction Agreement, immediately following completion of the GE Transaction, the combined business of Baker Hughes and GE O&G will be held by Newco LLC. GE will own approximately 62.5% of Newco LLC and Newco will own approximately 37.5% of Newco LLC through certain wholly owned subsidiaries of Newco, one of which will be the managing member of Newco LLC. GE will hold 100% of the Newco Class B common stock, which will represent approximately 62.5% of the voting power of the outstanding shares of common stock of Newco (calculated on a fully diluted basis) and stockholders of Baker Hughes immediately prior to the Closing will hold 100% of the Newco Class A common stock, which will represent approximately 37.5% of the voting power of the outstanding shares of common stock of Newco. The membership interests in Newco LLC, together with the Newco Class B common stock, will be exchangeable on a 1:1 basis for Newco Class A common stock, subject to certain adjustments. The rights of Newco Class A and Class B common stock will be identical as to voting rights, but unlike the holders of the Class A common stock, GE, as the holder of the Class B common stock, will have no economic rights in Newco, including no right to dividends and no right to any assets in the event of the liquidation of Newco. Effective from and following the Closing, Newco and its subsidiaries will operate under the name "Baker Hughes, a GE Company." Baker Hughes and GE each made customary representations, warranties and covenants in the Transaction Agreement, including, among others, covenants by each of Baker Hughes and GE to, subject to certain exceptions, conduct its business (in the case of Baker Hughes) or GE O&G (in the case of GE) in the ordinary course during the interim period between the execution of the Transaction Agreement and the Closing. In particular, among other restrictions and subject to certain exceptions, Baker Hughes agreed to generally refrain from acquiring new businesses, incurring new indebtedness, repurchasing shares, issuing new common stock or equity awards (other than equity awards granted to employees, officers and directors materially consistent with historical long-term incentive awards granted), or entering into new material contracts or commitments outside the normal course of business, without the consent of GE, during the period between the execution of the Transaction Agreement and the consummation of the GE Transaction. With respect to equity awards granted after the Transaction Agreement to officers and employees, such awards will not vest solely as a result of the GE Transaction but will be converted to an equivalent Newco equity award. However, they will vest entirely if an officer or employee is terminated within one year following the Closing of the GE Transaction. Baker Hughes is permitted to pay regular quarterly cash dividends to its stockholders between signing and Closing. GE O&G is permitted to pay dividends to GE between signing and Closing; provided that GE O&G is required to have a minimum level of working capital at Closing. The obligation of the parties to consummate the GE Transaction is subject to customary closing conditions, including, among others, (i) the approval of holders of a majority of the outstanding shares of Baker Hughes common stock; (ii) (A) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (B) the European Commission issuing a decision under the Council Regulation (EC) No. 139/2004 of January 20, 2004 on the control of concentrations between undertakings (published in the Official Journal of the European Union on January 29, 2004 at L 24/1) declaring the GE Transaction compatible with the common market, or, if the European Commission has adopted any decision under Article 9 of such regulations to refer the GE Transaction in part to any Member State of the European Economic Area, the European Commission issuing a decision declaring the part of the GE Transaction not so referred to that Member State compatible with the common market and every Member State to which part of the Transaction has been referred under Article 9 issuing a decision clearing the GE Transaction; and (C) the expiration or termination of all other applicable waiting and other time periods under certain other regulatory and competition laws; (iii) the absence of legal restraints and prohibitions; (iv) the effectiveness of the registration statement on Form S-4 to be filed by Newco with the Securities and Exchange Commission and the approval of the listing on the New York Stock Exchange of Newco Class A Common Stock to be issued in the GE Transaction; and (v) the completion in all material respects of certain restructuring transactions in connection with the GE Transaction. The obligation of each party to consummate the GE Transaction is also conditioned upon the other party's representations and warranties being true and correct (subject to certain materiality exceptions) and the other party having performed in all material respects its obligations under the Transaction Agreement. GE is required to take all actions necessary to obtain regulatory approvals (including agreeing to divestitures of certain specified businesses and any businesses of which any such business forms a substantial part (the "Specified Businesses")) unless the assets, businesses or product lines subject to such actions would account for more than $200 million of revenue in 2015. The divestiture of the Specified Businesses will not be taken into account for purposes of calculating the $200 million divestiture limit. Subject to certain exceptions, proceeds of any divestitures would remain with GE O&G and be transferred to Newco LLC following the Closing of the GE Transaction. Additionally, the Transaction Agreement provides for certain termination rights for each of Baker Hughes and GE, including (i) GE's right to terminate the Transaction Agreement if Baker Hughes' board of directors changes its recommendation that Baker Hughes' stockholders approve the Transaction Agreement; (ii) Baker Hughes' right to terminate the Transaction Agreement, prior to obtaining the approval of its stockholders, to enter into a definitive agreement providing for a superior proposal; and (iii) the right of each party to terminate the Transaction Agreement if the GE Transaction has not been consummated by the "termination date" of January 30, 2018, subject to each party's right to extend the termination date until April 30, 2018, if all closing conditions (other than receipt of certain regulatory approvals) has been satisfied by January 30, 2018. The Transaction Agreement provides for the payment by Baker Hughes to GE of a termination fee of $750 million if certain events described in the Transaction Agreement occur, including if Baker Hughes' board of directors changes its recommendation that Baker Hughes' stockholders approve the Transaction Agreement. Baker Hughes is also required to reimburse GE for certain expenses (up to $40 million) if the Transaction Agreement is terminated because Baker Hughes' stockholders have not approved the Transaction Agreement upon a vote taken thereon, and prior to the Baker Hughes stockholder meeting, a proposal for an alternative transaction was publicly announced and not withdrawn. If, within twelve months after such termination, Baker Hughes enters into an agreement providing for, or consummates, an alternative transaction with a third party, thereby triggering the $750 million termination fee described above, that termination fee will be reduced by the amount of any expenses previously reimbursed. In the event the Transaction Agreement is terminated by (i) either party as a result of the failure of the GE Transaction to occur on or before the termination date (as it may be extended) due to the failure to achieve certain antitrust-related approvals if all closing conditions (other than receipt of antitrust and other specified regulatory approvals and conditions that by their nature cannot be satisfied until the Closing but subject to such conditions being capable of being satisfied if the Closing date were the date of termination) have been satisfied, (ii) either party as a result of any antitrust-related final, non-appealable order or injunction prohibiting the Closing, or (iii) Baker Hughes, as a result of GE's material breach of its obligations to obtain regulatory approvals such that the antitrust-related condition to closing is incapable of being satisfied, then in each case GE would be required to pay Baker Hughes a termination fee of $1.3 billion. Baker Hughes and GE expect the GE Transaction to close in mid-2017. However, Baker Hughes cannot predict with certainty when, or if, the GE Transaction will be completed because completion of the GE Transaction is subject to conditions beyond the control of Baker Hughes. Baker Hughes incurred costs of $31 million related to the GE Transaction, which was recorded as Merger and related costs during the first quarter of 2017. |
Impairment and Restructuring Charges - (Notes) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Charges | IMPAIRMENT AND RESTRUCTURING CHARGES IMPAIRMENT CHARGES We conduct impairment tests on long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable based on estimated future cash flows. During the first quarter of 2017, based on current facts and circumstances, we did not identify any indicators of potential impairment for assets still in use that would require further examination. Impairments related to assets removed from service are included in restructuring charges below. During the first quarter of 2016, as a result of our customers' constrained capital spending budgets driven by deteriorating commodity prices, we performed impairment testing of certain long-lived assets and as a result, we recorded impairment charges of $118 million. Specifically, certain machinery and equipment with an initial total carrying value of $203 million was written down to its estimated fair value, resulting in an impairment charge of $106 million. Additionally, certain intangible assets with an initial total carrying value of $29 million were written down to their estimated fair values, resulting in an impairment charge of $12 million. The majority of the machinery and equipment and intangible assets impaired in the first quarter of 2016 were related to our businesses in Russia Caspian and Asia Pacific. These assets remain in use. The estimated fair values for these assets were determined using discounted future cash flows. The significant Level 3 unobservable inputs used in the determination of the fair value of these assets were the estimated future cash flows and the weighted average cost of capital of 15.0% for Russia Caspian and 13.5% for Asia Pacific. RESTRUCTURING CHARGES As a result of the downturn in the oil and natural gas industry, beginning in the first quarter of 2015 through the end of 2016, we took broad actions to reduce costs, simplify our organization, refine and rationalize our operating strategy and adjust our capacity to meet expected levels of activity. We refer to this initiative as the "Global Cost Reduction and Restructuring." During the first quarter of 2017, we initiated a separate restructuring plan to address specific market challenges in key areas, including offshore North America, North Sea, Africa and Southeast Asia. These actions are primarily related to workforce reductions. We refer to this initiative as the "2017 Oilfield Restructuring." As a result of the two restructuring plans described above, we recorded charges during the three months ended March 31, 2017 and 2016, as summarized in the table below:
Global Cost Reduction and Restructuring As part of our Global Cost Reduction and Restructuring plan, we took actions that included workforce reductions, contract terminations, facility closures and the permanent removal from service and disposal of excess machinery and equipment. Restructuring activities relating to these global cost reductions continued into the first quarter of 2017. However, we do not expect significant restructuring activities under this plan for the remainder of 2017. The composition of total restructuring charges we incurred under this plan in the first quarter of 2017 and 2016 is shown in the following table:
During the first three months of 2017, there were additional workforce reductions resulting in the elimination of approximately 70 additional positions worldwide, bringing the total number of positions eliminated to 26,270 since the first quarter of 2015 as a result of this restructuring activity. We made payments totaling $20 million during the first three months of 2017, and as of March 31, 2017, we had $42 million of accrued severance. We expect that substantially all of the accrued severance will be paid within 2017. Also during the first quarter of 2017, we incurred costs of $18 million primarily related to the termination of facility and equipment lease contracts, and impairment charges resulting from the closing of certain owned facilities primarily within our North America segment. As of March 31, 2017, we had accrued contract termination costs of $80 million, of which substantially all will be paid within 2017. 2017 Oilfield Restructuring As part of the 2017 Oilfield Restructuring plan, we took actions to reorganize our operating structure in certain countries based on recent changes in market conditions. Accordingly, we recorded a charge of $69 million, primarily related to workforce reductions. The composition of total restructuring charges we incurred under this plan in the first quarter of 2017 is shown in the following table:
The workforce reductions initiated in the first quarter of 2017 will result in the elimination of approximately 850 positions worldwide. As of March 31, 2017, we had $50 million of accrued severance. We expect that substantially all of the accrued severance will be paid within 2017. We do not expect significant restructuring activities under this plan for the remainder of 2017. |
Equity Method Investment - (Notes) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||
Equity Method Investment | EQUITY METHOD INVESTMENT We use the equity method to account for investments in companies in which Baker Hughes does not have a controlling financial interest, but over which it exercises significant influence over its operating and financial policies. Our consolidated net income (loss) includes our Company's proportionate share of the net income (loss) of the investee. In December 2016, we closed the transaction contemplated by the contribution agreement among subsidiaries of Baker Hughes, CSL Capital Management ("CSL") and West Street Energy Partners ("WSEP"), a fund managed by the Merchant Banking Division of Goldman Sachs, to create a North American onshore pressure pumping company, called BJ Services, LLC ("BJ Services"). Under the terms of the agreement, we contributed our wholly-owned North American onshore pressure pumping business, which consists primarily of cementing and hydraulic fracturing services in the U.S. and Canada. This also includes personnel, technology and infrastructure. We received a 46.7% interest in BJ Services, which we recorded as an equity method investment included in Other Assets in our consolidated condensed balance sheet. We retained no other services within the onshore North American pressure pumping business that was contributed to BJ Services. We will continue to provide customary support services during the transition period. BJ Services has access to certain of Baker Hughes' pressure pumping technology through a licensing agreement. We have representation on the BJ Services board of directors based on our ownership interest. While there is no formal agreement for strategic collaboration between the Company and BJ Services, the mixed board representation allows the Baker Hughes representatives and the BJ Services executives to identify possible opportunities for the two parties to collaborate. Through this collaboration, we may access BJ Services' product and service portfolio to provide solutions to customers in the North American onshore market if and when opportunities arise. Financial information for BJ Services is reported on a one-month lag. The impact of the lag on our consolidated net income (loss) is not expected to be material. BJ Services is taxed as a partnership, therefore, the net loss reflected below does not include income taxes. Summarized unaudited financial information for BJ Services for the two months ended February 28, 2017 is as follows:
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Segment Information - (Notes) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | SEGMENT INFORMATION We are a supplier of oilfield services, products, technology and systems used in the worldwide oil and natural gas business, referred to as oilfield operations, which are managed through operating segments that are aligned with our geographic regions. We also provide services and products to the downstream chemicals, and process and pipeline services, referred to as Industrial Services. The performance of our operating segments is evaluated based on operating profit (loss) before tax, which is defined as income (loss) before income taxes and equity in loss of affiliate and before the following: net interest expense, corporate expenses, impairment and restructuring charges, and certain gains and losses not allocated to the operating segments. Summarized financial information is shown in the following tables:
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Income Taxes - (Notes) |
3 Months Ended |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES For the three months ended March 31, 2017, total income tax expense was $47 million on a loss before income taxes, including equity in loss of affiliate, of $83 million, resulting in a negative effective tax rate of 56.6%. The negative effective tax rate is due primarily to the geographical mix of earnings and losses, which resulted in taxes in certain jurisdictions, including withholding and deemed profit taxes, exceeding the tax benefit from the losses in other jurisdictions due to valuation allowances provided in most loss jurisdictions. |
Earnings Per Share - (Notes) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE A reconciliation of the number of shares used for the basic and diluted loss per share computations is as follows:
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Inventories - (Notes) |
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Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | INVENTORIES Inventories, net of reserves of $157 million at March 31, 2017 and $188 million at December 31, 2016, are comprised of the following:
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Intangible Assets - (Notes) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | INTANGIBLE ASSETS Intangible assets are comprised of the following:
Intangible assets are generally amortized on a straight-line basis with estimated useful lives ranging from 3 to 30 years. Amortization expense for the three months ended March 31, 2017 was $14 million, as compared to $22 million reported in 2016 for the same period. Amortization expense of these intangibles over the remainder of 2017 and for each of the subsequent five fiscal years is expected to be as follows:
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Financial Instruments - (Notes) |
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Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments | FINANCIAL INSTRUMENTS Our financial instruments include cash and cash equivalents, accounts receivable, investments, accounts payable, short and long-term debt and derivative financial instruments. Except for long-term debt, the estimated fair value of our financial instruments at March 31, 2017 and December 31, 2016 approximates their carrying value as reflected in our consolidated condensed balance sheets. The estimated fair value of total debt at March 31, 2017 and December 31, 2016 was $3.35 billion and $3.36 billion, respectively, which differs from the carrying amount of $3.02 billion reported in each period, respectively, in our consolidated condensed balance sheets. The fair value was determined using quoted period-end market prices. During the first quarter of 2017, we executed an agreement with our primary customer in Ecuador, resulting in an exchange of certain fully reserved outstanding receivables for government-backed bonds. We recorded the bonds at their estimated fair value of $84 million at the date of exchange, which approximated their fair value as of March 31, 2017. Estimated fair value for these bonds was determined using discounted cash flows. The significant Level 3 unobservable input used in the determination of the fair value was the discount rate of 11.6%, which was based on the Ecuador government bond yield. This investment is classified as available-for-sale and included in Other Current Assets on our consolidated condensed balance sheet. |
Employee Benefit Plans - (Notes) |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefits Plans | EMPLOYEE BENEFIT PLANS We have both funded and unfunded noncontributory defined benefit pension plans ("Pension Benefits") covering certain employees primarily in the U.S., the United Kingdom, Germany and Canada. We also provide certain postretirement health care benefits ("Other Postretirement Benefits"), through an unfunded plan, to a closed group of U.S. employees who, when they retire, have met certain age and service requirements. The components of net periodic cost are as follows for the three months ended March 31:
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Commitments and Contingencies - (Notes) |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES LITIGATION We are subject to a number of lawsuits and claims arising out of the conduct of our business. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. We record a liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, including accruals for self-insured losses which are calculated based on historical claim data, specific loss development factors and other information. A range of total possible losses for all litigation matters cannot be reasonably estimated. Based on a consideration of all relevant facts and circumstances, we do not expect the ultimate outcome of any currently pending lawsuits or claims against us will have a material adverse effect on our financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these matters. We insure against risks arising from our business to the extent deemed prudent by our management and to the extent insurance is available, but no assurance can be given that the nature and amount of that insurance will be sufficient to fully indemnify us against liabilities arising out of pending or future legal proceedings or other claims. Most of our insurance policies contain deductibles or self-insured retentions in amounts we deem prudent and for which we are responsible for payment. In determining the amount of self-insurance, it is our policy to self-insure those losses that are predictable, measurable and recurring in nature, such as claims for automobile liability, general liability and workers compensation. During 2014, we received customer notifications related to a possible equipment failure in a natural gas storage system in Northern Germany, which includes certain of our products. We are currently investigating the cause of the possible failure and, if necessary, possible repair and replacement options for our products. Similar products were utilized in other natural gas storage systems for this and other customers. The customer initiated arbitral proceedings against us on June 19, 2015, under the rules of the German Institute of Arbitration e.V. (DIS). On August 3, 2016, the customer amended its claims and now alleges damages of approximately $224 million plus interest at an annual rate of prime + 5%. Hearings before the arbitration panel were held January 16, 2017 through January 23, 2017, and March 20, 2017 through March 21, 2017. In addition, on September 21, 2015, TRIUVA Kapitalverwaltungsgesellschaft mbH filed a lawsuit in the United States District Court for the Southern District of Texas, Houston Division against the Company and Baker Hughes Oilfield Operations, Inc. alleging that the plaintiff is the owner of gas storage caverns in Etzel, Germany in which the Company provided certain equipment in connection with the development of the gas storage caverns. The plaintiff further alleges that the Company supplied equipment that was either defectively designed or failed to warn of risks that the equipment posed, and that these alleged defects caused damage to the plaintiff's property. The plaintiff seeks recovery of alleged compensatory and punitive damages of an unspecified amount, in addition to reasonable attorneys' fees, court costs and pre-judgment and post-judgment interest. The allegations in this lawsuit are related to the claims made in the June 19, 2015 German arbitration referenced above. At this time, we are not able to predict the outcome of these claims or whether either will have any material impact on our financial position, results of operations or cash flows. On April 30, 2015, a class and collective action lawsuit alleging that we failed to pay a nationwide class of workers overtime in compliance with the Fair Labor Standards Act and North Dakota law was filed titled Williams et al. v. Baker Hughes Oilfield Operations, Inc. in the U.S. District Court for the District of North Dakota. On February 8, 2016, the Court conditionally certified certain subclasses of employees for collective action treatment. We are evaluating the background facts and at this time cannot predict the outcome of this lawsuit and are not able to reasonably estimate the potential impact, if any, such outcome would have on our financial position, results of operations or cash flows. On July 31, 2015, Rapid Completions LLC filed a lawsuit in federal court in the Eastern District of Texas against Baker Hughes Incorporated, Baker Hughes Oilfield Operations, Inc., and others claiming infringement of U.S. Patent Nos. 6,907,936; 7,134,505; 7,543,634; 7,861,774; and 8,657,009. On August 6, 2015, Rapid Completions amended its complaint to allege infringement of U.S. Patent No. 9,074,451. On September 17, 2015, Rapid Completions and Packers Plus Energy Services Inc., sued Baker Hughes Canada Company in the Canada Federal Court on related Canadian patent 2,412,072. On April 1, 2016, Rapid Completions removed U.S. Patent No. 6,907,936 from its claims in the lawsuit. On April 5, 2016, Rapid Completions filed a second lawsuit in federal court in the Eastern District of Texas against Baker Hughes Incorporated, Baker Hughes Oilfield Operations, Inc. and others claiming infringement of U.S. Patent No. 9,303,501. These patents relate primarily to certain specific downhole completions equipment. The plaintiff has requested a permanent injunction against further alleged infringement, damages in an unspecified amount, supplemental and enhanced damages, and additional relief such as attorney's fees and costs. During August and September 2016, the United States Patent and Trademark office agreed to institute an inter-partes review of U.S. Patent Nos 7,861,774; 7,134,505; 7,534,634; 6,907,936; 8,657,009; and 9,074,451. Trial on the validity of asserted claims from Canada patent 2,412,072, was completed March 9, 2017, with no decision from the Court at this time. At this time, we are not able to predict the outcome of these claims or whether they will have a material impact on our financial position, results of operations or cash flows. OTHER In the normal course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, such as surety bonds for performance, letters of credit and other bank issued guarantees, which totaled approximately $1.1 billion at March 31, 2017. It is not practicable to estimate the fair value of these financial instruments. None of the off-balance sheet arrangements either has, or is likely to have, a material effect on our financial position, results of operations or cash flows. |
Accumulated Other Comprehensive Loss - (Notes) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | ACCUMULATED OTHER COMPREHENSIVE LOSS The following tables present the changes in accumulated other comprehensive loss, net of tax:
The amounts reclassified from accumulated other comprehensive loss during the three months ended March 31, 2017 and 2016 represent the amortization of prior service credit and net actuarial loss, which are included in the computation of net periodic cost. See Note 11. "Employee Benefit Plans" for additional details. Net periodic cost is recorded in cost of sales and services, research and engineering, and marketing, general and administrative expenses. |
Summary of Significant Accounting Policies - (Policies) |
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Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Our unaudited consolidated condensed financial statements included herein have been prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America ("U.S.") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. These unaudited consolidated condensed financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. We believe the unaudited consolidated condensed financial statements included herein reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the interim periods. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. In the Notes to Unaudited Consolidated Condensed Financial Statements, all dollar and share amounts in tabulations are in millions of dollars and shares, respectively, unless otherwise indicated. |
New Accounting Standards | New Accounting Standards Adopted In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-17, Balance Sheet Classification of Deferred Taxes. The new standard requires all deferred tax assets and liabilities to be classified as noncurrent in a classified statement of financial position. We adopted this pronouncement prospectively on January 1, 2017, thus prior periods were not adjusted. The impact of adoption was not material to our consolidated condensed balance sheets. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. The simplifications in this standard affect several aspects of the accounting for share-based payment transactions, including the requirement to record all of the tax effects related to share-based payments at settlement (or expiration) through the income statement. We adopted this pronouncement on January 1, 2017. The impact of adoption was not material to our consolidated condensed financial statements and related disclosures. New Accounting Standards To Be Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The new standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity's nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The pronouncement is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The standard permits either a full retrospective method of adoption, in which the standard is applied to all the periods presented, or a modified retrospective method of adoption, in which the standard is applied only to the current period with a cumulative-effect adjustment reflected in retained earnings. We currently intend on adopting the new standard on January 1, 2018, following the modified retrospective method, but will not make a final decision on the adoption method until later in 2017. We are currently evaluating the provisions of ASU 2014-09 and assessing the impact, if any, that it may have on our financial position and results of operations. In the fourth quarter of 2016, we formed an implementation work team, completed training of the new ASU's revenue recognition model and began policy and contract review. Our approach includes performing a detailed review of contracts representative of our different product lines and comparing historical accounting policies and practices to the new requirements that are in the standard. We engaged external resources to help the Company complete the analysis of potential changes to current accounting practices related to material revenue streams and are substantially complete with the initial assessment. During the remainder of 2017, we will quantify the potential impacts as well as design and implement required process, system and control changes to address the impacts identified in the assessment. We are not currently able to reasonably estimate the impact the revenue recognition will have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases, a new standard on accounting for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB's new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, using a modified retrospective approach. Early adoption is permitted. We are currently evaluating the provisions of ASU 2016-02 and assessing the impact it will have on our consolidated financial statements and related disclosures. In the fourth quarter of 2016, we formed an implementation work team and completed training of the new ASU's lease model with the implementation team. We engaged external resources to complete an initial review of lease agreements representative of the different aspects of our business, to assess the potential changes to current accounting practices as a result of the new requirements that are in the standard. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. The new standard amends the impairment model for trade receivables, net investments in leases, debt securities, loans and certain other instruments to utilize an expected loss methodology in place of the currently used incurred loss methodology. This pronouncement is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Early adoption will be permitted for annual periods beginning after December 15, 2018. We are currently evaluating the provisions of the pronouncement and assessing the impact, if any, on our consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The standard addresses the classification and presentation of eight specific cash flow issues that currently result in diverse practices. This pronouncement is effective for annual reporting periods beginning after December 15, 2017. The amendments in this ASU should be applied using a retrospective approach. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures, but the impact is not expected to be material. In October 2016, the FASB issued ASU No. 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The standard removes the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. This pronouncement is effective for annual reporting periods beginning after December 15, 2017. The amendments in this ASU should be applied using a retrospective approach. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures, but the impact is not expected to be material. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of Step two of the goodwill impairment test. As a result, under this ASU, an entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This pronouncement is effective for impairment tests in fiscal years beginning after December 15, 2019, on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes the income statement presentation of net periodic benefit cost by requiring separation between the service cost component and all other components. The service cost component is required to be presented as an operating expense with other similar compensation costs arising for services rendered by the pertinent employees during the period. The non-operating components must be presented outside of income from operations. This pronouncement is effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures, but the impact is not expected to be material. |
Impairment and Restructuring Charges - (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | As a result of the two restructuring plans described above, we recorded charges during the three months ended March 31, 2017 and 2016, as summarized in the table below:
The composition of total restructuring charges we incurred under this plan in the first quarter of 2017 and 2016 is shown in the following table:
The composition of total restructuring charges we incurred under this plan in the first quarter of 2017 is shown in the following table:
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Equity Method Investment - (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||
Equity Method Investment | Summarized unaudited financial information for BJ Services for the two months ended February 28, 2017 is as follows:
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Segment Information - (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized financial information | Summarized financial information is shown in the following tables:
|
Earnings Per Share - (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Weighted Average Number of Shares | A reconciliation of the number of shares used for the basic and diluted loss per share computations is as follows:
|
Inventories - (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories, net of reserves | Inventories, net of reserves of $157 million at March 31, 2017 and $188 million at December 31, 2016, are comprised of the following:
|
Intangible Assets - (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | Intangible assets are comprised of the following:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Amortization expense of these intangibles over the remainder of 2017 and for each of the subsequent five fiscal years is expected to be as follows:
|
Employee Benefit Plans - (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Periodic Costs | The components of net periodic cost are as follows for the three months ended March 31:
|
Accumulated Other Comprehensive Loss - (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | The following tables present the changes in accumulated other comprehensive loss, net of tax:
|
Impairment and Restructuring Charges - Schedule of Restructuring Charges (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | $ 90 | $ 42 |
Global Cost Reduction and Restructuring | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 21 | 42 |
Global Cost Reduction and Restructuring | Workforce Reduction | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 3 | 47 |
Global Cost Reduction and Restructuring | Other Charges | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | (5) | |
2017 Oilfield Restructuring | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 69 | $ 0 |
2017 Oilfield Restructuring | Workforce Reduction | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 58 | |
2017 Oilfield Restructuring | Other Charges | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | $ 11 |
Equity Method Investment - (Details) - USD ($) $ in Millions |
2 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2017 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Schedule of Equity Method Investments [Line Items] | ||||
Net loss attributable to Baker Hughes | $ (18) | $ 0 | ||
BJ Services, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Interest acquired in BJ Services (percent) | 46.70% | |||
Revenue | $ 100 | |||
Gross profit (loss) | (28) | |||
Net loss | (39) | |||
Net loss attributable to Baker Hughes | $ (18) |
Income Taxes - (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Tax Disclosure [Abstract] | ||
Income taxes expense | $ 47 | $ 367 |
Loss before income taxes | $ 83 | |
Negative effective tax rate (percent) | 56.60% |
Earnings Per Share - (Details) - shares shares in Millions |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
||||||
Earnings Per Share [Abstract] | |||||||
Weighted average common shares outstanding for basic and diluted loss per share (shares) | 429 | 442 | |||||
Anti-dilutive shares excluded from diluted loss per share | |||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
Anti-dilutive shares excluded from diluted loss per share (shares) | [1] | 1 | 0 | ||||
Future potentially dilutive shares excluded from diluted loss per share | |||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
Anti-dilutive shares excluded from diluted loss per share (shares) | [2] | 2 | 7 | ||||
|
Inventories - (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventory, Net [Abstract] | ||
Inventory reserves | $ 157 | $ 188 |
Finished goods | 1,679 | 1,607 |
Work in process | 123 | 105 |
Raw materials | 105 | 97 |
Total inventories | $ 1,907 | $ 1,809 |
Intangible Assets - Schedule of Future Estimated Amortization Expense (Details) $ in Millions |
Mar. 31, 2017
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2017 | $ 39 |
2018 | 48 |
2019 | 45 |
2020 | 38 |
2021 | 32 |
2022 | $ 29 |
Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense for intangible assets included in net income | $ 14 | $ 22 |
Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 3 years | |
Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 30 years |
Financial Instruments - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Fair Value Disclosures [Abstract] | ||
Estimated fair value of debt | $ 3,350 | $ 3,360 |
Carrying amount of debt | 3,020 | $ 3,020 |
Available-for-sale Securities, Debt Securities | $ 84 | |
Fair Value Inputs, Discount Rate | 11.60% |
Employee Benefit Plans - (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
U.S. Pension Benefits | ||
Components of net periodic benefit cost [Abstract] | ||
Service cost | $ 10 | $ 13 |
Interest cost | 7 | 7 |
Expected return on plan assets | (10) | (10) |
Amortization of prior service credit | 0 | 0 |
Amortization of net actuarial loss | 2 | 3 |
Net periodic cost | 9 | 13 |
Non-U.S. Pension Benefits | ||
Components of net periodic benefit cost [Abstract] | ||
Service cost | 3 | 4 |
Interest cost | 6 | 7 |
Expected return on plan assets | (9) | (9) |
Amortization of prior service credit | 0 | 0 |
Amortization of net actuarial loss | 2 | 1 |
Net periodic cost | 2 | 3 |
Other Postretirement Benefits | ||
Components of net periodic benefit cost [Abstract] | ||
Service cost | 1 | 1 |
Interest cost | 1 | 1 |
Expected return on plan assets | 0 | 0 |
Amortization of prior service credit | (2) | (2) |
Amortization of net actuarial loss | 0 | 0 |
Net periodic cost | $ 0 | $ 0 |
Commitments and Contingencies - (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Loss Contingencies [Line Items] | |
Off-balance sheet arrangements | $ 1,100 |
Natural Gas Storage System in Northern Germany | |
Loss Contingencies [Line Items] | |
Value of alleged damages sought | $ 224 |
Marginal rate on annual prime rate (percent) | 5.00% |
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